The problem and dangers of the huge national debt and budget deficit in the united states of america

Twice the Fun for the U. China is often cited as an example of a nation that has enjoyed long-term fiscal and current account surpluses. Fiscal Deficit Despite being referred to as twins, each half of the duo of debt is actually quite different. Fiscal deficit is the terminology used to describe the scenario when a nation's expenses exceed its revenues.

The problem and dangers of the huge national debt and budget deficit in the united states of america

He caught our attention recently in a CNBC interviewwhere he specifically identified rising national debt as a major contributor to both lackluster economic growth and an increased risk of a severe market crash.

The problem and dangers of the huge national debt and budget deficit in the united states of america

Unsustainable debt will be the cause of the crash, according to Jakobsen, and will occur when the cash returns on assets become insufficient to service the debt taken on to acquire those assets in the first place. He gives no timeframe for his thesis but says that the problem of huge debts has been swept under the carpet by central bankers and policymakers and will come back as low inflation or even deflation He argues that U.

Had we remained at pres productivity, the U. Hope is not good policy and it belongs in church, not in the real economy.

The Second Twin: Current Account Deficit

That will be the sixth year with US growth near 2. Any talk of higher interest rates is hard to take seriously when US growth is going nowhere and world growth is considerable weaker than was expected back in January or as recently as July, for that matter. It seems everyone has forgotten that even the US is a part of the global economy This is relatively down from its worst levels when interest rates were much higher, but only because the Federal Open Market Committee has so drastically lowered the costs for the US government to issue debt with a zero interest rate policy.

The real growth per capita was about 1. Anything which is not productivity is consumption of capital. The debt load that Jakobsen cites refers to the percentage of the publicly held portion of the U."The National Debt stood at $ trillion the day Mr.

Obama was inaugurated. The Bureau of Public Debt reported today that the National Debt had hit an all time high of $ trillion. The Congressional Budget Office estimates that GDP will be $ trillion in and that the federal budget deficit will be $ billion.

Do the math and you’ll see that it’s projecting a budget deficit equal to percent of GDP. On March 15, , the U.S. national debt exceeded $21 trillion. This is more than America's annual economic output as measured by its gross domestic product. The last time the debt-to-GDP ratio was more than percent was in , when the nation had to pay for World War II.

Due to all of the deficit spending to finance this redistributive largess over what the government collects in tax revenues to fund it, interest on the Federal debt will increase from 1. 4 percent of GDP in to percent of GDP in , or more than a percent increase in the interest cost on the national debt over the next ten years.

Debt for state and local governments shot up too, with state debt peaking at over 5 percent of GDP in and local debt peaking at over 28 percent in Total government debt in the bottom of the Great Depression in , including federal and state and local debt, amounted to 70 percent of GDP.

The First Twin: Fiscal Deficit

U.S. Deficits and the National Debt (Andrew Kelly/Reuters) The Obama administration’s budget plan has revived debate over the sustainability of U.S.


National debt of the United States - Wikipedia